The new government’s revenue plan to raise taxes on hybrid cars by more than 60 per cent has come under criticism from car importers and vehicle users, calling for a review of the system. Hybrid cars known to be fuel efficient, economical and environmentally friendly vehicles may be gradually pushed out of the market due [...]

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Vehicle importers decry steep duties on hybrid cars

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The new government’s revenue plan to raise taxes on hybrid cars by more than 60 per cent has come under criticism from car importers and

Hybrid cars galore at sales centres

vehicle users, calling for a review of the system.

Hybrid cars known to be fuel efficient, economical and environmentally friendly vehicles may be gradually pushed out of the market due to high taxes, they claimed.

The prices of hybrid cars up to 1,800 CC engine capacity moved up by Rs. 600,000 to Rs. 1.3 million after the interim budget presented by Finance Minister Ravi Karunanayake on January 29.

Vehicle Importers’ Association of Lanka President Sampath Merenchige told the Sunday Times that the Government too will suffer losses in the long run as vehicle imports too will come down due to the high taxes.

He said the tax composition of the vehicle will be 92 per cent of the total value of the vehicle with the new taxes and Sri Lanka will be second only to India which imposes a 125 per cent tax.

Sampath Merenchige, President of the Vehicle Importers' Association of Lanka

He said that though there has been a tax reduction on vehicles of less than 1000 CC engine capacity, it will only add to the increase of vehicles which are not fuel efficient and not environmentally-friendly.

Mr. Merenchige said that as a result of the new taxes, prices of hybrid cars awaiting clearance at the harbour, have been increased in order to offset losses on vehicles which have already been ordered by importers and are currently on the way.

He said some of the importers have decided to cancel the Letters of Credit placed to import the cars before the tax was announced.

“Some of the importers who have placed their orders from Japan have decided to cancel the orders and auction these vehicles in Japan itself to minimise the losses”, Mr. Merenchige said.

He said that it appeared that the tax had been increased by the Government in order to raise more revenue.

“We also feel that some of the major companies involved in importing brand

new cars will benefit with the increase of taxes on hybrid cars” he said.

He said his organisation had 325 members who were involved in import of used cars.

He said that before the budget it had been pointed out to the Finance Minister that the increase of taxes will affect car imports.

Mr. Merenchige said earlier the Government had encouraged the import of hybrid cars.

He said that a team of experts should be appointed to review the taxes and draw up a new tax system.

He said the middle class will be affected by the new taxes.

The Association’s members on Friday met Finance Minister Ravi Karunanayake and requested that the taxes be revised.

However, the members said they did not get a favourable response.

“We also requested that those who have opened LCs before the interim budget, be charged on the previous tax system, but that request too was turned down”, Mr. Merenchige said.

On Thursday MP Sunil Handunnetti (JVP) raised the issue in Parliament as well.

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